What is maximum allocation?
Maximum allocation is the total capital a prop firm will entrust to a single trader. It is reached through the scaling plan and most often sits between $150,000 and $2 million depending on the firm.
It is the ceiling on what this firm can eventually be worth to you, and it deserves a look at the first purchase.
The orders of magnitude
On the futures segment the ceiling is generally low — often $150,000 — because the model rests on standardised accounts and a recurring subscription rather than on growth in allocated capital.
On forex, ceilings are markedly higher, from several hundred thousand to several million dollars depending on the firm.
The nuance to check
An advertised allocation of two million does not mean you will trade a two-million account.
Some firms reach that figure by adding up several accounts: five accounts of $400,000 do total two million, but each keeps its own drawdown and its own rules. Running five accounts in parallel has nothing in common with trading a single size.
Others apply the ceiling to a single account size, which is far more useful and far rarer.
Drawdown at the ceiling
Second question, just as decisive: does the drawdown follow the capital as it grows, or does it stay calculated on the initial amount?
An account taken from $100,000 to $400,000 whose drawdown is still calculated on $100,000 becomes extremely constrained: the relative margin for error has been divided by four.
When it matters
For a trader starting out, the ceiling is theoretical: reaching the upper tiers takes months of consistency.
For an already-consistent trader, it is one of the most structuring criteria. At equal performance, allocation determines income directly — far more than a few points of profit split.
Updated on
Related terms
- Drawdown Drawdown is the maximum loss allowed on a prop firm account before it is closed. It is expressed as a percentage or a fixed amount, and calculated under three models — static, end-of-day trailing or intraday trailing — with very different consequences.
- Funded account A funded account is the trading account a prop firm allocates once the evaluation is passed. The trader operates under continuing risk rules and keeps a share of the profits, without ever holding the nominal capital.
- Profit split The profit split is the share of gains paid back to the trader on a funded account. It generally sits between 80 and 90 %, and can reach 100 % at some firms through a scaling plan or a promotional offer.
- Scaling plan A scaling plan is the mechanism by which a prop firm increases the capital allocated to a consistent trader. Progression triggers after a number of profitable cycles or successful withdrawals, and sometimes comes with a higher profit split.